The piece “Eye on Malawi’s EITI: EITI and Climate Change” featured below was initially published in Malawi’s Mining & Trade Review Issue Number 32 that is circulating this December 2015.

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

EITI and Climate Change

By Rachel Etter-Phoya

As this goes to press, Malawi’s delegation is participating in the 2015 United Nations Climate Change Conference in Paris. The Conference aims for all nations to reach a binding and universal agreement on the climate in order to reduce greenhouse gas emissions. The agreement will seek to limit the global temperature increase to 2°C above pre-industrial levels. People who follow the annual negotiations of the Conference of the Parties know that this will be no easy feat and that no such agreement has been reached in 20 years.

Climate variability and change, including the increase in extreme weather events such as flooding and droughts experienced here in Malawi, are arguably caused by these increasing global temperatures. At the same time, the G7, formed of some of the world’s largest emitters of greenhouse gases, has committed to end their dependence on fossil fuels and decarbonise their economies. As a result, eyes are turned to the extractive industries and its production of fossil fuels (coal, oil and gas) which emit carbon dioxide, a greenhouse gas associated with the rise in temperatures.

This year, a debate has arisen about the Extractive Industries Transparency Initiative (EITI) role in addressing climate change. A letter was sent by a number of civil society organisations including WWF International and Friends of the Earth Europe to the EITI Board in October 2015, prior to the board meeting which saw Malawi’s EITI application approved. They have called on the EITI to reflect “the legal and economic realities of climate change in order to remain relevant in a rapidly changing geopolitical environment” by including disclosure requirements for “climate risk”.

Publish What You Pay’s International Director, Marinke van Riet has further argued that EITI reporting should include more environmental information, such as environmental impact assessments and environmental fines, which in many countries is not easily accessible. She states that this

environmental information is indispensable if citizens, governments, investors and companies are to ascertain the true cost of a project and make better decisions about the social and environmental viability of extractive activity.

According to the letter sent to the Board, a broadened application of the EITI would include climate-related revenue streams such as carbon taxes and repayment of climate finance received, descriptions of the laws, regulations and reforms governing the extractive industries that are associated with climate change, inclusion of civil society groups with climate change expertise in the multi-stakeholder group, an explanation of whether or not each fossil fuel project can proceed in a 1.5°C or 2°C world, and any subsidies awarded to fossil fuel projects.

In response, the EITI International Secretariat highlighted that the reason the initiative has been so successful to date is its ability to keep a wide group of stakeholders together and to develop a flexible standard that is relevant across the world. They argue that placing requirements on the type of civil society organisations to include in the multi-stakeholder group would undermine country ownership and not necessary reflect the priorities of countries and that climate risk disclosure would not be relevant for each country.

At present, some countries already report on environmental taxes and subsidies paid to fossil fuel companies because payments have been deemed material and relevant – it is up to each country to determine which payments are material and relevant for annual EITI reporting. In Malawi, this process of deciding revenue streams and amounts for reporting is currently being examined through a scoping study as directed by the MWEITI multi-stakeholder group and secretariat. The findings of this scoping study will be launched in January 2016.